Emirates will challenge Cathay's dominant role on the Taiwan-Europe route because the deep-pocketed carrier can leverage its better European network and competitive airfares. Photo: AP

The move by Emirates Airlines to add a new service to Taipei would divert Taiwan transit passengers from Hong Kong to Dubai, dealing another blow to Cathay Pacific Airways' long established and lucrative network business in the region, analysts said.

Emirates will challenge Cathay's dominant role on the Taiwan-Europe route because the deep-pocketed carrier can leverage its better European network and competitive airfares.

Some 65 per cent of the transit passengers from Taiwan opt to fly with Cathay now because Taiwan has limited choices in international air services, said Edwin Lau Wing-chu, vice-president of Hong Kong and Taiwan at Emirates Airlines. Taiwan has direct flights to just four European cities; Paris, Frankfurt, Vienna and Amsterdam.

"Taiwan is not a big market but [is one] with good potential as its long-haul market is underserved," Lau added.

Taiwan … [has] good potential as its long haul market is underserved

EDWIN LAU WING-CHU, EMIRATES

With an eye on luring Taiwanese travellers to fly via Dubai to Europe, the Middle East or other destinations in North and South America, Emirates kicked off six weekly flights to Taipei starting last week, deploying Boeing 777-300ER aircraft.

Lau said when the extension of the south runway at Taipei Taoyuan International Airport is completed next year to meet the requirements for Airbus 380 landings, Emirates will consider switching to the bigger plane. Lau also said it is likely that the service will be extended to twice daily in the near term.

"Any airline wanting to compete with the Middle East carriers is destined to be on the losing end given that airlines is a network business and the international network of Emirates is expanding in accordance with its aggressive acquisition of planes," said Eric Lin, a transport analyst at UBS.

"In the long run, Hong Kong's hub status is at risk" because transit passengers to North America will eventually shift to mainland carriers when they expand their international services, Lin said.

Cathay has already seen the threat to its European routes from Middle East-based carriers, so has shifted its focus to North America, where it upgraded its New York service to four times daily, said another analyst, who declined to be named.

Cathay and its subsidiary Dragonair flew five million passengers between Hong Kong and Taiwan last year, ranking No3 after Taiwanese airlines China Airlines and Eva Airways.

Cathay said 4 per cent of the five million passengers flew beyond Hong Kong to Europe.

In terms of international traffic serving Taiwan, the Cathay grouping has a share of 16 per cent, according to data from the Civil Aeronautics Administration of Taiwan.

This article appeared in the South China Morning Post print edition as Emirates' Taipei service seen as threat to Cathay

for those unfamiliar with air service outside HK and the USA, many carriers are 50% of the price and 200% better service than Cathay Pacific. Cathay Pacific is for big spending business travelers - their average consumer is abused.